AI Profitability In Spotlight As Dell, Palo Alto, Snowflake Report Earnings | IBD

Hey everyone and welcome to earnings cheat sheet for Friday, August 28th. It's Alexis Garcia and Ed Carson here and we'll be taking a look at some key upcoming earnings reports to help you prepare for the week ahead. And Ed, uh, this is going to be our last show together for a while. Um, IBD's Rachel Fox will be taking over hosting duties starting next earning cycles. So, she does such a great job with IBD Live and we're really excited to see what she brings to the show. So, little bit of a bittersweet moment here, Ed. Uh, but you know, time marches on so [laughter] and so do Ernie. So, what do you have for us this week? >> Yeah, I'm gonna miss uh doing this with you, but yes, uh Rachel is great. I want to take a look at Dell, uh, Snowflake, and PaloAlto Networks. >> All right. Well, let's start with Dell Technologies, which is scheduled to post Q2 earnings on Tuesday, September 1st. Earnings for the personal computer turned data center company are projected to rise 116% to 491 per share. Meanwhile, revenue is expected to climb 51% to 44.93 billion. And here's why we're watching Dell. The main focus is really going to be on that AI server profitability. While demand for Dell's AI infrastructure is soaring, uh low margins on high cost components really threaten overall profitability. So investors will want to see if Dell can turn uh those accelerating sales into expanding profit margins at and uh you know the stock has done really well this year. It's climbed over 230% and Evercore upgraded the price target for Dell stock ahead of earnings. So, you know, it seems like analysts really expect hopline growth to again be driven by that AI server segment. >> Yeah, it'll be interesting because they also do they also do PCs and they also do storage and we had some bad news this week from some some players in those spaces. So, we'll have to see. So yeah, the AI server area has been what's been strong. Want to see how that's going and how they're dealing with the memory costs and other things like that. That was a concern I had heading into the latest earnings report and it's like nope, we're just going to blow out the results. And uh so just a lot of demand there. Uh obviously the Nvidia earnings news I mean while it didn't seem to have a ton of cotail still seems like a positive for uh these AI server providers and yeah so just want to see how the earnings are and the guidance out there you know is that again is the AI spending continuing and they're still taking advantage of that uh going forward. And looking at the chart here, Ed, uh Dell stock is almost uh back to this 46947 buy point. Uh it attempted a breakout uh here on August 4th. It pulled back to the 50-day line and rebounded from there. So again, and when that could be potentially actionable here uh with earnings around the corner. >> Yeah, I mean it could be. I mean, like I would want to wait until earnings. That's the issue. uh this has been a tricky stock because unlike it held up better than a lot of the AI hardware spaces and again after a huge move on earnings so understandable if it did that but it has been choppy so it's number of times it's flash buy signals and then pulled back so it has not been an easy hold uh even if ultimately it sort of went sideways so uh definitely I think you should wait for earnings and then it's unclear if we'll get an opt because it could gap up or down making it tricky to do things but yeah definitely one to watch It's one of the better performing names for the year and and did pretty well over the last few months. Uh just been hard to actually to hold through some of those things. Uh but the RS line is basically at highs. Looks a little better on a weekly, but there's been some big moves in there, too. >> Yeah. And I wanted to show the weekly because we've seen this uh stellar run that Dell has had uh since uh basically back in March here. Um but it seems like it's really taken some time to digest some of those gains which which isn't a bad thing at all. So again uh flirted with the 10-week line here. Um any further thoughts on Dell? Uh again we have strong composite rating of a 95, very strong comp EPS rating of 97. RS line is at a 99. So um all good signals here from Dell. >> Yeah, again it's like this surged right before all the AI stocks sold off, but this one really didn't. It just has been choppy back and forth, but choppy in a not a super negative way because it hasn't been chopping lower like a lot of uh the 50-day 10-week line seems like a better place to buy. It is sort of around the buy point and the 50-day 10 week. So, there's a lot of reasons why you could be interested in this name. It's just it's just a just tricky heading into earnings. Otherwise, it would look pretty much actionable right now. >> All right. Well, let's go ahead and move on to Palo Alto Networks, which is expected to report fiscal Q4 results on Tuesday, September 1st. Earnings for the cyber security play are expected to rise 3% to 98 cents per share. And revenue is projected to climb 32% to $3.35 billion. And here's why we're watching PaloAlto. uh we'll be watching net new annual recurring revenue and we'll want any updates on the uptake for the new AI product called Prisma heirs and Ed again I think that investors are really going to want to see uh if the company's strategy to consolidate all their cyber security clients onto one uh unified platform I is actually maintaining any momentum. Yeah, because you want to see some growth on all those things because Palo Alto just hasn't been growing super fast which is fine and it's like and uh so want to see that want to see that uh picking up that there is that growth we saw from crowd strike is like that the growth seem to be coming in on the AI side. So that's uh and so just want to see that that momentum is there. Obviously it's one of the traditional old school uh cyber security names uh but want to see if the growth can ramp up again uh in the near future. >> Yeah. And speaking of ramping up Ed, let's go ahead and take a look at the chart because uh Palo Alto having a nice day here on August 27th. It's up over 13%. Um but prior to that we had so you know I call it drifting back to the 50-day line but that seems a little bit more severe than a drift back but it has rebounded off that key moving average. It's above the 21day line. Uh it's not too far off highs around the 398 level. So talk to me here because you know if you bought back in May when the stock broke out you do have some profit cushion but with [clears throat] many stocks in this current market it has been very choppy. has been choppy though. It's tended to chop higher which is nice, you know, and this was really the first time, you know, that it touched to the 50-day line and it's come right back off of it. Yeah, people who bought a while back, no problem. No problem at all. I don't really again this would have been actionable today like a lot of software names, but we'll have to see with earnings coming up. Ideally, this would sort of pause and go sideways, hold the bulk of these gains and then you know maybe maybe then it would provide some kind of entry depending on how earnings re you know respond. But yeah, so it's been really strong. It's just can it keep up the growth? Can it can it rebound the growth to justify continued gains? uh because there is the point also after this move there's going to be expectations of strong results because there's already I mean there's sort of a sense that this is sort of priced in given that move and uh yeah so we'll we'll just see on the on the earnings front because you can see the earnings have been lagging uh revenue so revenue there there has been some pick up in revenue >> you know can the earnings turn around and that may be that they do any III investments and that hopefully will turn around but we're not supposedly seeing it in fiscal 2027 which we are now in uh we're going to get the July quarter for a Q4, but yeah, fiscal 2027. What is earnings going to be like? >> And I'm going to go ahead and switch over to the weekly here, Ed, because we can see uh the bounce off the 10-week line here. Um but any other thoughts here with Palo Alto? Again, we can kind of see longer term. Uh it looked like it was, you know, not doing so much over the last couple years. it has started to move higher uh in 2026. Um so any final thoughts? >> Well, this is just a reminder that you want to pay attention to different sectors. Doesn't mean you have to be constantly analyzing but you know Palo Alto and a lot of other cyber security names. they weren't doing anything, weren't doing anything, and then they started taking off, and there was a few opportunities in May to get on board. And not saying that it can't keep going, but this is why you want to be paying attention to them, you know, even if you're just looking a little bit. I'll look through some of the names or some of the sector ETFs. Yeah, it wasn't doing anything. Most of the sector really wasn't. There was all sorts of concerns. Uh, and now AI seems to be a tailwind. And when you get that vibe shift, uh, you know, that that's you you want to be ready on that. And uh you know that's obviously easy to say now in hindsight, but that's what you want to be doing in general, looking for these things. >> All right. Well, let's go ahead and look at Snowflake. Uh that company will report earnings on Wednesday, September 2nd. The firm is expected to see Q2 earnings up 29% to 45 cents per share with revenue also rising 30% to $1.48 billion. And here's why we're watching Snowflake. Uh again, we'll be looking at that net revenue uh retention figures. Uh that will tell us if Snowflake's existing customers are expanding uh their spend over time. Uh we'll also be looking for product revenue guidance and Gen AI monetization. And Ed, Snowflake is a little bit different from their competitors because it has more of a a pay as you go uh type uh consumptionbased model for their products. And I think Wall Street is really just uh wanting to see that its new AI initiatives uh are driving that consumption higher just um we want to see if that's actually happening or if people are just uh moving their money around and budgeting in it differently. >> Yeah. And you know this is sort of in the data analytics space doing quite well. Yeah. I think there was again like a lot of other names it was struggling. It was really hard hit by the concern about AI is going to destroy everything. You look at that. Yeah. There was a lot of lot of losses for a long time and then it turned around on the last earnings report and there was other things going on obviously when cyber security took off but Snowflake had a real and sometimes there's a game changer and it wouldn't have been easy to hold if you bought that gap up you were thrilled for a couple days and then it sold off but then it rebounded from the 21day a line and then finally you know that would have been a place and then breaking out like a month ago you know so there were uh it sort of a turnaround just a lot of strength there again it just seems like people are now expecting a lot of growth. There is take up with the AI. Uh and again, this seems to be one of the all of a sudden now very much a leader. Uh and it didn't sell off. It didn't sell off, you know, where it did pull back in the last couple weeks where a lot of the other leading names showed some real damage. Round tripping some short-term gains. This one did not. I mean, it gave up some gains, but it found support right where you'd want to and uh is trying to move higher now. >> Yeah. had a nice bounce off the 21day line. Um, so Ed, then talk to me then if you did buy this breakout uh back on July 29th. Um, are you keeping an eye then on um, you know, do you take some partial profits here? Do you hold on? What are your thoughts there? >> You know, I would probably if I had this, I would probably be holding it just because it's got a good cushion. It's almost up 20%. Yeah, it got up to the but sell zone, but it got up there pretty quickly. Uh so that makes you oh maybe I'll hold it but you know it pause which pulled back which can happen when you get to the things but now it's bouncing. So if you held it through all this time it seems like oh why wouldn't you keep holding it uh you know it seems like this sector's got real momentum and it seems like one of the leaders again yeah this thing could tank. There's nothing wrong with taking partial profits heading into earnings. That's always again sort of what your rules are but this you know in general this one just looks is looking pretty strong. So and this is a strong sector. Uh, and generally I think people should be trying to find ways to get into the sector more. Uh, not overload it, but making sure that you're taking part in it. And yeah, that weekly I like that. See, that's a 3 weeks tight um right there. So, it's sort of a shelf above this prior thing. You know, it doesn't look it sort of looked a little extended from the 21-day line after the move that we're looking at today, but this is looking tight. Um, you know, 3 weeks, four weeks tight that we might have. So, that could be an entry into it after earnings. It could be. Now, we'll see. We'll see how earnings actually are, but or at least or an add-on entry, too. Uh, so, uh, nice action here. >> All right. Well, those were some of the top names on our radar. Uh, but let's look at some more, Ed. Uh, starting with Broadcom. Uh, one of the big, uh, chip names out there. Um, hasn't been doing so well, though. We can see uh this breakout back here on April 22nd. Um it ran up to a high of 495, but it has really um struggled lately. It is now testing the 200 day line. >> Yeah. And this is one of those reasons where we talk about buy on fundamentals and technicals and sell on technicals. The growth is, you know, as people were waiting for it because it was sort of slow growth in 2023, 2024. It's like, oh no, no, it's coming. It's coming. And now it's come. I mean, it's the growth is picking up. uh strong results but it's it's not doing stuff there. Uh you know obviously a lot of AI stocks they ran up in early August and then fell back over. Broadcom had the added issue is that uh Marll announced a big contract with Google and there and Marll and and uh Broadcom are both in these custom AI chips and one of Google's one of um Broadcom's big customers is Google. So the sort of an extra reason to sell it. This one this one looks more damaged than a lot of names. I mean, it plunging through the 200 day line. It needs to get back above the 200 day line. Needs to get back above the 50-day line, but even then, it wouldn't really look actionable. I mean, it seems like it needs to get above short-term highs. And that's a big lift. That's a lot. And at that point, it almost seems like, well, don't you need to take a rest here? So, it seems like it needs repair work. It certainly could do that. The fundamentals are great. Maybe it could turn around, but it's uh it it's got some work to do, it seems like, chartwise. >> Yeah. Let's take a look at Credo Technology Ed. Another big name there in the AI space. Earnings there on September 1st. Uh this one again uh really choppy chart action here. It's technically in a double bottom base. Uh again that breakout failed. Um and now it is below the 50-day line testing the 21day. >> Yeah. And it just just this seems like a like a lot of things. I mean, stocks hitting resistance at the 50-day line or clearing some entries and then reversing like a lower and just there's just a lot of that action. It's just tough and you know, you just want to have to keep on working on things. Uh I don't think a decisive move over the 50-day would be enough because of that big vertical drop. There's no real trend line you can break. That's just too steep. Uh, I, you know, I'd like it to maybe work back up towards that double bottom buy point or treat this as a double bottom with an enormous handle um kind of situation. Maybe get up there, pause, but earnings are coming. I mean, earnings are coming. So, who knows where this will go. I mean, this could easily go gap up to a new high. It could gap up to the lowest levels, go below the 20-day line. So, uh, very hot growth, tremendous, but, uh, really can have big swings on earnings and and sometimes it'll swing around intraday after earnings, too. So, uh, one to watch, but it's hard to play. >> Yeah, let's take a look at MongoDB at uh, earnings there also on September 1st. Uh this one trading just above a buy zone, but again uh another one we've seen. We had this breakout, hit highs. Uh we had this pretty sharp pullback to the 21day line. Uh but it's rebounded. Um so thoughts here? >> Yeah, we'll just have to see how things go. It could potentially be actionable on earnings. I mean, it's got pretty decent growth, but this one really, and I mean really moves on earnings. The last several earnings reports, it has risen or fallen 20%. you know, and that's that's just and that's, you know, I mean, there's probably bigger swings that it's had intraday and all that. So, 20% close uh either direction. It could be great. It could be absolutely amazing, but it could also fall to the 200 day line from here. So, I would really caution people if they have a small cushion that they might want to take at least partial profits. Uh, this one is very, very volatile on earnings. >> All right, how about we look at Zcaler? Another one with earnings on September 3rd. Uh this one not doing so well. It's been in a pretty bad downtrend. It has retaken the 200 day line. Uh but why is it important to watch Zcaler earnings and what it might mean for the rest of the sector? >> Hey along with Palo Alto, we're getting sort of rounding out a lot of the earnings reports. I mean this week and then you know next week of Palo Alto big reports. Yeah. I mean all the other names ran up. This one tanked on earnings. You know every other one was surging. So yeah, I mean this one could break out, but the base basically formed below the 200 day line and it hasn't really had a prior uptrend. I would like to see this move and then form a new base. There's a lot of overhead resistance to this, you know, a lot of losses. It, you know, it just seems like this is a lagger to a lot of other names. Again, maybe this will turn around, but it just seems like there's a lot better options in software right now and in cyber security, >> right? Let's move on and take a look at Huelet Packard. Uh earnings there on September 2nd. This one in a cup with handlebars with a 6344 buy point. >> I mean could be actionable off of earnings, you know, depending on where it goes from there. Uh especially if it's like an early entry like I can imagine the 60 level seems nice. That's sort of like where it actually closed our closing high because they both, you know, the space is higher than maybe it looks just it peaks up and then comes back down. uh along with Dell very important you know that whole it's a pretty much a direct competitor there uh you know really strong earnings move but then sold off but that's also because that's when AI stocks sold off the same time it was sort of poorly timed for the earnings in that regard >> right all right how about we take a look at Guidewire uh software name earnings there on September 3rd >> seems a no man's land this is insurance underwriting software so I mean it's doing it's been doing well um again rebounding but I'm not sure where you enter this name. >> All right, how about we move on to NetApp earnings on September 3rd. Uh this one trading just below a buy zone, Ed, and at the 21day line. So, another one here that could be potentially actionable with earnings ahead. >> Yeah, this one looks pretty good. One of the clearest where okay, a modest move and this is in a buy zone. You know, even a solid move seems like you could probably be buying it, you know, as it breaks up there. We'll see. this held up reasonably well as a as a peer uh on this particular day that we're looking at sold off pretty hard on results. So uh you know the expectations might be lowered a little bit. They're not too high that so that's that could be a positive. So if the results are strong this could go but we'll just have to uh have to see. It needs to get above back above the buy point when we get when we get earnings. >> All right. How about we take a look at Sienna Corp earnings there also on August 3rd. Uh, this one was a big AI uh, infrastructure play, Ed. It has pulled back off of highs. It's below the 50-day, testing the 21day line. >> Yeah, I suppose I guess above the short-term highs. It could be actionable, but a this is this one sold off a lot. And yeah, I mean, it's not that far from 50-day, but it's a long way and hasn't made much of a bounce. The 50-day line has done most of the work coming down rather than the stock coming up. But I'll also note that this is an important report because this was one of the real triggers for the AI sell-off. There was a couple other names, but this one it's pretty much where the timing was and that's where a lot of the optical plays. There's some other optical plays where that might be in better shape. Uh as a result, I think Sienna and to a lesser extent Credo will be important for the optical space. Uh it seems like there might be better options if Sienna does well than than Sienna itself. >> All right. All right. Well, let's wrap up a look at a couple of retailers. Uh discount retailer Five Below has earnings on September 2nd. Uh this one uh looks to be right at the buy point, Ed. Uh so thoughts here? >> Yeah, it's doing pretty well here at just uh um solid growth. I mean, I think the growth is supposed to slow down going forward at some point. So, it'll be interesting to what they have to say. It has made a big run. So, is is it going to need to take a longer break? I don't know. Uh but yeah, this this one is looking good heading into earnings. >> And let's go ahead and wrap with a look at Victoria's Secret earnings there on September 3rd. >> Well, sort of me is like if I were shopping from I don't quite feel that comfortable getting into this name right here, like going to the stores. Uh I mean, it's right here. It would almost be buyable because it sort of bounced off the 50-day line, got above some short-term highs. Uh I mean it's pulled back a little bit today, but I I think you can imagine a way to enter if it doesn't go too strong on earnings. Uh so because this one made a really strong move off of earnings and held. So I can imagine something going well here. The growth has picked up really strong, you know, rebound turnaround play. Uh I just have to see how how earnings react. But yeah, it's it's definitely one to watch. >> All right, Ed. Well, thank you so much for your insights today. We really appreciate it. >> Thank you, Alexi. And that wraps it up for this edition of Earnings Cheat Sheet. If you want more market analysis, be sure to tune in to Stock Market Today that goes live after the closing bell. Thanks so much for watching and we'll see you all next earning season.